A while ago my turning lights indicators together with clicking sound, low and high beam and fog lights indicators in the dashboard stopped working. Also the reversing light quit. And the alarm for forgotten lights also went AWOL.
At the beginning the malfunction came and went. Sometimes it was OK after I started the car but quit after a few minutes. It got worse and worse and it stopped working without revival.
I have a 97 E39 520i, with low instrument cluster.
I have informed myself a bit and all this is related to K-BUS. All the signals for the nonfunctioning control lights should come from LCM over KBUS to the dash. The signal for reversing light should com from dash to LCM which in turn engages the light bulb in the rear.
I strongly suspect something is wrong with the bus. Either in LCM, dash or the wiring in between?
I have located a X10116 (k-bus) connector behind the glove box and I have selectively disconnected other wires trying to pinpoint the branch with fault if any. No success. I have only 5 wires on this connector: KOM cluster, LCM, G II and I think IHKA and radio.
Next thing I tried was to measure the voltage on the bus. With no traffic it sits on cca. 12V, which is ok.
Next thing I hooked up an oscilloscope to the LCM k-bus wire and engaged the hazard lights (all 4 turn indicators). On the scope I could see regular signals, but what puzzled me that the spike were pulled down by only 5.8V, which is, I think is not enough. According to the http://www.adrl.co.uk/E39/ibus.pdf the low spikes should come to below 2V. In my case it comes down to just about 6V. I would like to confirm that this is indeed to little.
What could be the cause of that? Is the k-bus interface on the LCM faulty? Could it be some fault in the wiring? I have no spare LCM so I cannot experiment. Is there something I could check in the LCM board, like some buffer or optocoupler or something?

Check the wiring loom going into the trunk. A lot of people have had problems with the wiring fraying and shorting out. This has caused a host of problems depending on what wire shorts out.

Do you mean the wires in a rubber boot between car and the trunk lid. I have looked there and although there is some traces of insulation deterioration, I don't think there is a kbus connection to the trunk lid.
I have already disconnected the connector found in the left side of trunk, behind trim. It lookeg goog, no chaffing, no corrosion.

I don't think there is the problem. I think there is no kbus wire to the trunk lid. With the exception of the reversing light all the lights on the outside work ok. Reversing light is triggered via telegram over kbus to the LCM.
As I said something must be wrong with kbus, either on the LCM side, KOM instrument cluster side or something disrupts the bus.
I think signal level peak to peak voltage is to low, but I have no way to confirm that.

I'm having very similar problems with my '02 540iT. This LCM/K-BUS sound like the culprit, but I have no idea where to find them in my vehicle.

Here's my story:

A couple weeks ago I was driving and noticed the turn signal indicator stayed on for a few seconds after the signals were off, and the radio and computer turned off at the same time. That was the tip of the iceberg...

The following have since only rarely and briefly worked correctly:
Turn signal indicator and clicking do not work, but outside signal lights still work;
When set to Automatic, there is a delay in turning the headlights on, then they don't turn off when I exit my garage;
Reverse lights do not work, nor does the always-on rear wiper function when reversing, (but the tilt-down of the right side-view mirror works perfectly);
Trip functions of computer (is it still called an OBC?) work in the driver console, using the turn-signal stalk control, but Check Control function and center console display (along with radio) remain dark and do not work;
Many of the warning systems (probably all controlled by the Check Control part of the computer) such as the coolant level, selv-level "inact", key in ignition, headlights on, don't function;
When the systems do come on, it is often just the lights of the radio/computer, but no sound or functionality.

A possible cause in my case may be that about a week before all this started almost a full gallon of water spilled in the back. I didn't have time to do more than sop up what was in the carpet, so over the next couple days I ran the heater on high with the vents pointed to the back and the windows open. When I had the time to clean it up there was a puddle in the spare tire well - very close to the air compressor and related wiring for the Electronic Height Control - which has been only slightly more glitchy than prior to the spill.